One more thing which wasn’t mentioned: there is a variable inside the protocol called popDebtDelay which dictates when bad debt can be settled/nullified with surplus once a liquidation starts.
popDebtDelay is currently set to 3 days meaning that once a liquidation starts, it has 3 days to run before the bad debt it confiscated will pop and try to be settled with surplus. If the auction doesn’t finalize within 3 days, some/all of the bad debt may not be covered.
Three days is arguably a short period of time in a protocol that will not be able to change that variable. The proposed value for that variable prior to ungovernance is 28 days (4 weeks) which will provide ample time to the market to bid in liquidations.